Investment
Case
Investment
Team
The
Fund
Summary
HSBC GIF Chinese Equity Fund
Investment case
Why invest in the HSBC GIF Chinese Equity Strategy ?
`
Chinese economic growth at 7-8% or higher led by robust domestic
consumption and investment
`
Mid 2009, China shares valuation still attractive
`
Private sector on the rise and higher spending power
`
Disciplined and repeatable investment process, with the strong research
culture, in-depth research to find the most attractive stock opportunities in
the region
An experienced Chinese Equity Team
13 dedicated investment professionals
Name
Role
Years’
Experience
Years with
HSBC/Halbis
Richard Wong
Investment Director – China
20
14
Alan Zhong
Investment Manager – China
5
4
Debbie Chan
Investment Analyst – China
5
2
Philip Mok
Investment Director – Hong Kong
20
6
Elina Fung
Associate Director – Hong Kong
8
2
Hugh Lee
Senior Investment Analyst – Banking
13
3
Mathew Lee
Investment Analyst – Property
9
3
Patrick Crivelli
Investment Analyst – Consumer
7
3
Florence Hsieh
Head of Dealing
19
15
Samuel Lai
Senior Dealer
20
8
Andrew Lee
Head of Portfolio Management Unit
14
4
Francis Chung
Director, Asia Product Specialist
18
2
The fund: HSBC GIF
Chinese Equity Fund
HSBC GIF Chinese Equity Fund
Fund facts
Recommended Investment Horizon:
5 years
Investment Universe:
Chinese equities with no capitalisation
constraints.
Benchmark: MSCI
China
Stock Weighting:
A concentrated portfolio of our preferred
stocks (40 to 60)
HSBC GIF Chinese Equity Fund
Investment Philosophy
`
We believe that Chinese equity markets are inefficient and due to these
inefficiencies may be volatile
`
Inherent value will be recognised by the market, eliminating mis-pricing thus
allowing us to deliver superior returns
`
Our valuation driven approach focuses on companies growing shareholder
value and the price one pays for this growth
`
We believe companies with consistent above average growth produce
HSBC GIF Chinese Equity Fund
Process Highlights
`
Disciplined, valuation driven investment process
`
Stock valuation and research generated by experienced team of fund
managers and specialised analysts
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Quantitative and qualitative stock screening process
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Dedicated risk management team, bringing together a range of risk
HSBC GIF Chinese Equity Fund
Investment process
Screen the Universe
Investable Universe
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Quantitative &
qualitative screening
`
Investable universe of
300 stocks
`
150 one-on-one
company visits p.a.
Stock Research
& Valuation
`
Research by Fund
Managers and
Analysts:
–
Management
quality
–
Competitive
advantage
–
Earnings
sustainability
–
Valuation
`
Analysts’ Fair Value
Determine Stock
Positions
`
Position size relative
to benchmark:
–
Analyst Fair Value
Target
–
Strength of
conviction
–
Upside potential
–
Contribution to risk
Model
Portfolio
`
40-60 stocks held
`
Strong earnings at a
reasonable price
`
Client guideline
compliance
`
Multi-faceted risk
analysis
Simple, Disciplined, Repeatable
HSBC GIF Chinese Equity Fund
Portfolio Construction
`
No formal limitation on sector allocation
`
Stock positions will be reviewed with a view to sale when:
–
The company is trading above the top of our analyst’s assessment of its fair value
range
–
The outlook for the key drivers turns negative, a signpost that earnings will come
under pressure
–
A more attractive investment opportunity is identified
–
There is a change to management strategy
–
A major sale of assets or divisions has occurred
–
There is an unexpected structural change to an industry in which the company is
HSBC GIF Chinese Equity Fund
Portfolio Composition (30 June 2009)
Stock
Weight
China Construction Bank
8.71%
China Mobile (HK) Ltd
8.42%
Industrial & Commercial Bank
of China
6.58%
Petrochina (China)
6.57%
Bank of China
5.02%
China Life Insurance Co (2628)
4.74%
CNOOC Ltd (883) (China)
4.06%
China Shenhua Energy Co Ltd
3.56%
China Resources Land Ltd
2.92%
Tencent Holdings Lts
2.89%
Sector
Weight
Financials
40.65%
Oil & Gas
13.60%
Basic Materials
12.14%
Industrials
10.96%
Telecommunications
10.48%
Consumer Goods
5.11%
Technology
3.67%
Utilities
0.08%
HSBC GIF Chinese Equity Fund
Performances (30 June 2009)
Performance in USD (% Change)*
Rolling time period 30/06/2008 - 30/06/2009 30/06/2007 - 30/06/2008 30/06/2006 - 30/06/2007 30/06/2005 - 30/06/2006 30/06/2004 - 30/06/2005
HSBC GIF Chinese Equity -11.6 -7.9 72.2 38.5 15.5
Rolling time period 1 month 3 months 6 months 1 year 3 years 5
years 2009 2008 2007 2006
Fund 3.0 33.0 33.9 -11.6 40.3 124.3 33.9 -53.8 55.4 82.8 Morningstar mean 4.8 33.5 42.8 -7.8 57.7 130.7 42.8 -53.9 69.9 78.5 Benchmark 4.4 37.8 41.6 -5.5 71.0 163.0 41.6 -50.8 66.2 82.9 Fund rank 52/79 47/78 59/74 49/71 33/45 18/32 59/74 33/65 32/49 15/43 Quartile rank 3 3 4 3 3 3 4 2 3 2
* The above performance figures refer to the past and are not a reliable indicator of future returns. The value of investments and any income from them, can go down as well as up. The above performance figures are calculated in USD, and changes in the rate of currency exchange may affect the value of your investment.
Source: Morningstar, bid to bid, gross income reinvested. Performance information is up to 30 June 2009, Morningstar run date 09 July 2009. Morningstar Sector used Offshore and International Funds, Eq China. Benchmark source: Datastream. From the inception of the fund to 31/12/97, the benchmark of the fund was the Peregrine Greater China Index. Between 01/01/98 and 31/05/05 the benchmark was CLSA China World. Please note quartile rank is a term widely used in financial services to denote performance of a fund within its sector. For example a ranking of 1 denotes a Fund in the top 25% of its peer group sector, with a ranking of 4 denoting a fund in the bottom 25% of it's peer group sector. Total return, sector median performance and ranks - Data Source - Copyright 2009 Morningstar, Inc. All Rights Reserved.
HSBC GIF Chinese Equity Fund
Statistics (30 June 2009)
Fund size (in millions USD):
3,052.06
Portfolio Turnover*:
0.52
Volatility**: 38.69
Tracking error**:
4.06
154
14-H
S
B1
00
5a
HSBC GIF Chinese Equity Fund
Fund description and Manager profile
Richard Wong
Investment Director, Equities, Halbis Capital Management (HK) Ltd.
Richard Wong has been working in the industry since 1990. Prior to joining
Halbis in 1997, Richard was employed by Nikko Capital Management (HK) as
Senior Portfolio Manager. Richard holds an MBS in Finance from New York
University.
`
The fund offers investors access to the worlds fastest growing economy
through a well-diversified portfolio of Chinese shares
`
The portfolio - which currently ranks among the largest Chinese equity
funds globally - is predominantly invested in large companies, although
stock selection is conducted across a range of market capitalisations
`
It is managed by a very experienced and team who seek to deliver
performance through a sophisticated valuation-driven approach, coupled
with disciplined risk management
HSBC GIF Chinese Equity Fund
Fund Details
Redemption fees
NONE
Dealing
Daily before
10:00 (CET)
Valuation
Daily
Settlement
Trade day +
4 business days
Management
company
HSBC Investment Funds
(Luxembourg) SA
Investment
advisor
Halbis Capital
Management
(Hong Kong) Limited
Custodian
RBC Dexia Investor
Services Bank S.A.
Launch price
(in USD)
10
Legal form
Sub-fund of
Luxembourg UCITS
HSBC Global
Investment Funds
Base currency
US$
Launch date
25 June 1992
ISIN code
LU0039217434
Management
fees
1. 50% tax included
Performance
fees
NONE
Subscription
fees
5.54% maximum, tax
included
Summary
`
A recognised leader in the management of Asian financial assets
`
37 investment professionals based in Hong Kong and Singapore
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Opportunity to invest in the fastest growing economy through diversified
portfolio
`
Approximately US$3.9bn in funds under management of Chinese Equities
What kind of investor should consider the
HSBC GIF Chinese Equity Fund?
`
Experienced investors with a long term investment horizon
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Investors seeking lower-beta and relatively uncorrelated investments in
more nascent areas of growth
`
Investors comfortable with Exposure to emerging markets and smaller
capitalisation companies that can increase the volatility of returns and may
restrict liquidity
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